The Trade Desk (NASDAQ: TTD) stock tumbled more than 12% in premarket trading on Friday, May 8, after the advertising technology company failed to meet all Wall Street expectations for the past quarter.
For example, adjusted earnings of $0.28 per share were noticeably below analyst estimates of $0.32. Moreover, GAAP net income declined to $40 million ($0.08 per diluted share), compared with $51 million ($0.10 per diluted share), in the same quarter a year ago.
On the other hand, revenue rose 12% year-over-year to $689 million, above the forecasted $679.5 million. The decline in stock prices thus primarily reflects concerns about second-quarter guidance, as management now hopes for at least $750 million in revenue, $22.4 million below Wall Street expectations.
Currently, TTD shares are down more than 37% year-to-date (YTD), hovering around $20.5 in pre-market hours at the time of writing.
Wall Street cuts TTD stock price targets
As expected, Wall Street was quick to react to the price correction, with multiple firms revising their outlooks on The Trade Desk.
For example, Oppenheimer removed its $35 TTD price target and dropped the rating on the shares from ‘Outperform’ to ‘Perform,’ arguing that growth won’t exceed single-digit figures this quarter.
Similarly, KeyBanc downgraded the stock to ‘Sector Weight,’ noting that guidance came in below its expectations.
“We were cautious on TTD into earnings, but 2Q guidance was below our expectations. Our sense is the combination of Middle East turmoil, ad agency tensions, and changes to industry structure are pressuring growth,” KeyBanc analysts wrote.
A silver lining in all of this is that customer retention remained above 95% during the quarter, extending a streak that has lasted more than a decade.
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